By Angelique Smit, Client Relationship Manager at RDB Consulting
Outsourcing has become an increasingly popular option for businesses as the current economic climate continues to put pressure on spend, driving cost cutting initiatives within companies, particularly in the Information Technology (IT) sector. However, outsourcing can deliver value beyond cost savings, further improving service levels and driving greater efficiencies. It also minimises downtime and improves profitability as a result. Getting full value out of your outsource contract can, however, prove challenging. An outsource contract needs to be carefully controlled to ensure it continues to deliver the expected service levels and benefits.
In order to get the most out of your IT outsource contract, there are six core ‘tips’ or best practices that clients should ensure outsource service providers subscribe to. By following these six top tips, organisations will obtain the best possible balance of service and cost.
Top tip #1: Define SLAs and OLAs
A service level agreement (SLA) is the foundation of any outsource contract and provides the standard for expected service levels. This must be agreed on between both the outsourcer and client and once established, will outline the requirements such as time-to-respond and mean-time-to-repair. A thorough investigation is required to determine the type of service levels that are required for the client’s business. It is also important to link the SLA to an Operations Level Agreements (OLA), which is an extension of the SLA, by determining and outlining how the SLA is executed. These two agreements provide the benchmark for measurement and management of the outsource contract.
Top tip #2: Communication – a two way street
Communication is an important component of a successful outsource contract and should be a ‘two way street’ whereby feedback is given from both the outsource provider and the client. The communication should also involve all parties including the client, consultants on all levels (from Junior to Principal) as well as the management team. Discussions around health checks and regular updates between the client and outsource provider will assist to identify issues or problems proactively and resolve them quickly. Equally important, communication allows the client to manage the SLA and OLA, ensuring standards and service levels are maintained and delivered according to expectations.
If communication is not clear and well structured from all sides, issues and problems may ‘slip through the cracks’ and impact the business. This in turn will impact service delivery which may fall below expected levels, resulting in poor outcomes.
Top tip #3: Appropriate skills levels
It is vital for the outsource consultant to have the appropriate skills when engaging with a client. If consultants are not equipped with the required skills to match the needs of the client, they will not deliver the required services efficiently or effectively. This is especially important in the IT sector where outsourced services may be mission critical to the business.
Furthermore, the outsource provider must ensure that consultants are properly and continuously trained on the latest developments within their industry and the services they provide. The outsource service provider should ensure that training forms part of its consultants Key Performance Indicators (KPIs), with regular reviews and planning as well as repercussions if targets are not met.
Top tip #4: Culture fit
Another important area to consider is that of culture fit. Consultants need to align themselves with the culture of the organisation they will be working with to ensure they function optimally in their job. This requires knowledge and research from the outsource provider prior to engagement with the client. It is important to establish values, culture and ethos to ensure the outsourcer ‘fits’ in with this culture.
If the culture fit between the client and outsource provider is not aligned, it can lead to poor service delivery. Outsource providers should also be flexible and sensitive around the issue of culture fit and if there is a potential problem, to proactively remedy.
Top tip #5: Measurement of Service
All aspects of the contract including the SLA and OLA should be monitored on a regular basis to ensure the highest levels of overall satisfaction. If the contract is a large one, meetings should be more frequent. However, these meetings should be kept brief and to the point. With regular monitoring, issues can be raised, documented and adequately addressed. It is also important to obtain positive and negative feedback from the client so that the outsource provider has an understanding of what is successful and which areas need to be addressed. This allows the outsource provider to reward and remunerate consultants that are performing, keeping them motivated.
Regular service delivery surveys are also vital, allowing the outsource provider to assess the overall satisfaction of the client and address if lacking.
Top Tip #6: Maintain the management of the contract
One critical error organisations often make with outsourcing is completely relinquishing control in favour of the service provider. This often leads to poor delivery. Maintaining the management of the contract including the SLA and OLA with regular communication from the outsource provider is the final step or best practice to ensure outsourcing delivers full value.
Customers who maintain control and incorporate regular communication around this will typically receive higher levels of service and greater value than organisations that don’t.
IT outsourcing is beneficial due to the skills levels required in this field and the shortage of certain specialists. However, when opting to outsource, it is important to look towards best practices that are aligned with industry standards, which will prevent misunderstandings and issues with service levels resulting in a more stable environment. This will also allow companies to make the most of their outsourced services including greater economies of scale, access to skills, cost effective services and improved productivity.